Medicaid Financing for Services in Supportive Housing for Chronically Homeless People: Current Practices and Opportunities. Highlights


This paper describes the specific ways in which Medicaid reimbursement is being used for some of the services provided to chronically homeless people, including services that address their health and behavioral health needs and help vulnerable people get and keep stable housing. States have used different types of Medicaid benefits and payment mechanism to provide reimbursement for some of the services delivered to people who live in PSH. This report documents some of these approaches and describes both promising practices and challenges or obstacles that have been identified by providers of health care and supportive services and by state and local government officials in several communities. The report also identifies some opportunities for federal policy guidance, and describes some of the ways in which things are likely to change during the next few years with the implementation of the ACA.

In most states, chronically homeless people become eligible for enrollment in Medicaid because they are disabled and receiving benefits through SSI. Many, but not all of these disabled homeless adults have a serious mental illness (SMI). Some homeless adults have other disabling health conditions, including physical disabilities, serious medical conditions, brain injuries or cognitive impairments, and they may also have co-occurring substance use disorders. Homeless people with disabilities may be eligible for and enrolled in SSI and Medicaid benefits, or they may be able to establish eligibility for these benefits with assistance from health care providers and effective benefits advocacy.

In some states homeless people without disabilities, or those whose disabilities are attributable to substance abuse (who are not eligible for SSI), are eligible to enroll in Medicaid under the terms of a state’s Medicaid waiver. The ACA also allows states to expand Medicaid eligibility to people on the basis of income, without other “categorical” eligibility criteria, and a growing number of states have done so since the beginning of 2011. In states that have expanded eligibility for Medicaid through waivers or through the provisions of the ACA, homeless people may enroll in Medicaid without demonstrating that they are disabled.

Federally Qualified Health Centers (FQHCs) are providing services in PSH in some communities, often using funding sources that include federal grants from the Health Resources and Service Administration (HRSA) and Medicaid reimbursement. FQHC services may be delivered through home visits or in on-site offices or satellite clinics located in PSH buildings, or through a clinic that is accessible to PSH tenants. Some FQHC providers offer a broad range of health and behavioral health services and other supportive services, using multi-disciplinary team models, while others offer clinical services in partnership with other organizations that provide behavioral health and other services.

The FQHC Medicaid reimbursement mechanism provides payment to providers based on face to face encounters between Medicaid-eligible individuals and certain types of licensed clinicians, including doctors, mid-level primary care practitioners, psychiatrists, and licensed clinical social workers, but does not directly reimburse costs associated with services provided by other providers of health care or behavioral health services, such as nurses and some mental health workers, or services of case managers and medical social workers. Costs for some members of interdisciplinary teams who work in PSH have been disallowed in the determination of FQHC payment rates in some states, despite evidence of the effectiveness of these team models of care for homeless people with complex health and behavioral health problems who have not been effectively engaged or served by other types of health care and treatment programs.

Many of the FQHCs that provide services to chronically homeless people, including services in PSH, receive funding through HRSA’s Health Care for the Homeless (HCH) program. There is a need to clarify federal policy and provide guidance to HCH programs about how long they can continue to serve people who have been homeless after they move into PSH.

Medicaid-reimbursed mental health services, including services covered under Medicaid’s Rehabilitation Option are frequently delivered as part of PSH programs that serve homeless people with SMI. There is significant variation among states in definitions of covered services, provider qualifications, medical necessity criteria, utilization management systems and procedures, and payment mechanisms. In some states fiscal responsibility for the non-federal portion of Medicaid reimbursement for mental health services is shared with or shifted to counties, and some or all Medicaid mental health or behavioral health services may be administered separately from other health benefits through “carve-out” and/or managed care arrangements.

Depending on the provisions of State Medicaid Plans, reimbursement may be available for services such as Assertive Community Treatment (ACT), Community Support Teams (CSTs), or other flexible, mobile, community-based services that support managing symptoms of mental illness and restoring functioning impaired by mental illness. Services can focus on skill-building to develop interpersonal and community-living skills. Some of these service models allow--and may require--the delivery of services outside of clinic or office settings, in a person’s home or other community setting. Some states allow Medicaid reimbursement for peer counselors or other staff members who do not have clinical licenses, but have some combination of education, training, and/or personal experience.

Medicaid reimbursement can cover a substantial portion of the costs of the services PSH offers to help homeless people with SMIs get and keep community housing and achieve health and recovery goals. Documentation requirements for Medicaid reimbursement of these services can be challenging for some supportive housing providers, and mental health benefits may not include coverage for some services that PSH tenants need--including services to address chronic health conditions or support to access medical care, and some services that address co-occurring substance use problems or other issues that could result in a return to homelessness. PSH service-providers deliver many supportive services that are not Medicaid reimbursable mental health or behavioral health services.

Often medical necessity criteria used to determine whether a person is eligible to receive mental health services focus only on diagnoses, symptoms, and functional impairments related to a diagnosis of mental illness, and do not consider other co-occurring health disorders or risk factors related to homelessness. In some states, such as Illinois, criteria include consideration of other factors such as repeated arrests or incarcerations, chronic homelessness, public intoxication, or high use of detoxification services. For homeless people with mental illness, consideration of these co-occurring disorders and risk factors recognizes the complexity of health challenges among people who need and can benefit from the types of services most often reimbursed by Medicaid in supportive housing.

These benefits are generally available only to persons with SMIs. Some chronically homeless people with other disabling health conditions, including for example those with serious chronic medical conditions, milder forms of mental illness such as depression, cognitive impairments and/or long-term substance use disorders, could benefit from similar types of services that incorporate self-management of chronic health conditions, engagement in effective treatment and recovery support, reduction in high-risk behaviors, and support for community-living skills. However these models of service are generally not covered as Medicaid benefits for people who do not have a diagnosis of SMI, even if they are enrolled in Medicaid.

In many states the systems of financing and delivering health, mental health and substance use treatment and recovery services are highly fragmented. As a result, there may be limited incentives for the system responsible for mental health services to invest in services that reduce costs in the health care system, particularly if costs and savings appear in different budgets or even in different state or local government entities. This can make it challenging for program administrators or policy makers to link savings from reduced hospitalizations to investments in community mental health services.

A few organizations are developing and implementing integrated models of health and behavioral health care that combine Medicaid-reimbursed FQHC and mental health services. These integrated models may be developed when a single organization, such as a HCH program, develops the capacity to deliver services through multiple programs, contracts and financing mechanisms that operate within the same organization. State rules may require that these programs operate with separate staff, licenses, record systems, and payment mechanisms, creating challenges when agencies seek to integrate services to meet the complex health, behavioral health, and support services needs of chronically homeless people.

In other cases, primary care and behavioral health services may be integrated when two provider agencies enter into partnerships, with each agency meeting the requirements and using the Medicaid payment mechanisms associated with separate systems of health care and mental health or behavioral health services. Even when services are provided by staff members who work for different organizations, some partnerships work to integrate the delivery of primary care and behavioral health services through interdisciplinary teams that regularly share clinical information and collaborate to engage and deliver care to chronically homeless people with very complex health problems and support them in PSH.

Medicaid reimbursement for substance abuse services is limited in many states, and frequently there is no Medicaid reimbursement for services that are delivered outside of designated substance abuse treatment facilities. As a result, reimbursement is generally not available for the services delivered in PSH that focus on substance abuse problems, including motivational interviewing, counseling to support recovery goals and prevent relapse, crisis intervention and services that help to encourage people to use more formal treatment services or to manage health risks associated with co-occurring chronic illness and substance use disorders.

Medicaid reimbursement is available for Home and Community-Based Services (HCBS) for some persons with disabilities, in states that provide benefits covered under waivers or optional benefits. HCBS benefits may include flexible services and assistance to help people with disabilities live independently, instead of in nursing homes or other restrictive settings. However in most states, the housing and service models and Medicaid payment mechanisms that have been developed for people with disabilities who are coming from (or being diverted from) nursing homes or institutional settings are not aligned or coordinated with the supportive housing models and Medicaid payment mechanisms used for chronically homeless people with disabilities, and there are different service-providers and government officials involved with linking housing and services for these populations, in spite of the similarities and overlaps between these two groups of disabled people. One challenging issue is differing perspectives on the meaning of “living in an integrated setting” and debates among some advocates and policy makers about the appropriateness of site-based supportive housing in which all or most of the units are designated for homeless people with disabilities.

Managed care financing and care delivery systems may offer opportunities and incentives to use Medicaid to pay for services that improve health outcomes and reduce avoidable hospitalizations or emergency room visits, and may provide some flexibility for health plans or provider networks to use capitatedpayments to cover some services that might not be reimbursed in a fee for service payment system, if they can be justified by offsetting savings in other health care costs. So far there has been limited experience with managed care plans paying for services in PSH, but there have been promising initiatives in a few states including Massachusetts and Pennsylvania. With growing numbers of people with disabilities enrolling in Medicaid managed care, there may be new opportunities or additional experience in the next few years.

Emerging models and new Medicaid options, including Accountable Care Organizations and health homes may provide new opportunities for Medicaid reimbursement for services in PSH. In the current economic and fiscal climate, states are likely to be hesitant to offer new types of benefits if they cannot be confident of their ability to control state costs or achieve offsetting savings, but there may be potential opportunities for innovative programs that can achieve and facilitate reinvestment of significant savings from reductions in avoidable hospital care and other high-cost health care service utilization while improving health outcomes.

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